IT Cost Optimization: Proven Practices to Save Your Business’s Money
Both big and small businesses always strive to increase their incomes, coming up with new ways of achieving this goal. Most often, these include two most common approaches:
- increasing sales, which results in higher revenue but requires a significant amount of time, effort, and planning.
- IT cost optimization, which enables them to save money and gain more profits in this way.
The second option prevails among the businesses because they understand there are many costs that are wasted instead of bringing the desired result. When the companies utilize optimization techniques, they can get more out of less, increasing their profits and ensuring the effectiveness of their IT infrastructure.
Although many people think that IT cost optimization and cost-cutting are the same terms, the first one is actually continual, while the second is one-time.
So, before moving to the optimization methods, let’s tackle the true meaning of this term.
What is cost optimization?
Cost-cutting and optimization are related because you can’t optimize IT cost without reducing spendings on some aspects of your company’s structure. However, cutting costs is a temporary solution, which has short-term effects and eventually wears off. So, if you don’t want to go round in circles, opt for IT cost optimization.
The mentioned approach is more strategic-oriented and helps companies maximize their value by being implemented in different ways. For example, if you emphasize digitalization and automate processes to boost efficiency, it will positively impact your IT cost savings. Besides, this model is sustainable, rationally reducing the run-on costs.
You can use Gartner’s decision framework, which is established on six pillars and helps you identify where exactly you need to reduce, protect, and invest in order to get the most out of IT cost optimization. These questions include:
- potential financial benefit. Evaluate to what degree your cost initiatives will impact the bottom line. For example, “how much will my company save if we opt for this solution?”
- business impact. Decide how the chosen initiative will affect your employees and daily operations. For example, whether it will harm productivity.
- time requirement. Since time is the most valuable asset, determine whether implementing a specific initiative won’t take longer than your company can afford.
- degree of organizational risk. The benefits of IT cost optimization could be seen only if the team could adapt to the changes. So, ensure the effectiveness of implementing optimization techniques and prepare your teams for them.
- degree of IT technical risk. The current operations also rely on the IT cost optimization initiatives, so introduce them into your business only if you’re sure they won’t cause delays in service delivery or productivity.
- investment requirement. Determine the amount of investment required for the implementation optimization methods and your company’s willingness and ability to make such investments.
Also, the IT cost optimization framework differs for each business, so check out the following IT optimization techniques to understand which one meets your company’s needs.
Top 10 IT cost optimization ideas
The primary step towards IT cost optimization is the analysis, which helps to define the excess expenditure on given criteria. After that, you can opt for IT optimization methods to avoid cost overruns and not lose your positions. The most effective practices to introduce within the IT cost optimization framework are the following:
1. Improve IT financial transparency practices
Since IT cost optimization is a financial matter, you need to gain visibility on your current state of IT spending before you embark on optimization techniques. In this way, you’ll understand what areas can work with lower budgets but be as efficient as they are now.
So, before taking further steps, gain insights into how your money flows in and out. After that, you would make data-driven budgetary decisions.
2. Outsource functions to remote employees
Outsourcing certain functions, such as software development, has been considered a practical option for companies that strive for flexibility and better productivity and don’t want to get cheaper services at the expense of quality. But firstly, you should check offshore rates for software development in different countries.
There are many IT outsourcing destinations and vendors that can help you eliminate the need for office equipment, rental, and other stuff related to having in-house employees. Besides, remote workers are known for being more productive and having a better focus on their core tasks.
When cooperating with an IT outsourcing company like Qubit Labs, you get access to the vetted developers and the world’s most tech-savvy experts without spending a fortune on their services.
3. Leverage modern technologies
Both physical and virtual tools help companies optimize their performances, saving their money and time. You can use paid and free tools, choosing the ones that will positively impact your organization. Pay attention to employee collaboration and data organization apps, like Trello or Google Docs; although they are quite simple, they completely transform the business.
Emphasize spending time wisely; for example, if the discussion can be held via messenger, it’s better to opt for this alternative rather than scheduling endless phone calls and face-to-face meetings.
4. Move to the cloud and optimize cloud resources
Present-day cloud solutions allow for eliminating the complexities and simplifying the software management and upgrades. So, when opting for this IT cost practice, you can adopt a hybrid, multi-cloud architecture to speed up processes, make the infrastructure agile and convergent, and centralize control and administration by unifying diverse systems.
When moving to the cloud, you can increase IT infrastructure availability, scalability, and flexibility. Besides, optimizing cloud resources can reduce the total cost of its ownership due to the selection, design, and migration of computing and storage resources.
5. Choose free yet efficient marketing strategies
Any business needs sufficient and effective marketing but focusing on paid ads only is the high road to wasting your business costs and being left without a penny on core business goals.
So, IT cost savings will increase thanks to the low-cost but high-results marketing approaches. For example, you can start writing engaging content for your company blog, promote the business on social media, get free backlinks, and ask customers to provide feedback about your cooperation.
There is an array of methods and free marketing tools to choose from. You can consider hiring a professional content writer, launching referral programs, managing in-house SEO, implementing social media strategies, and networking with influencers specializing in your niche.
When cheaper alternatives are combined with paid ads, you can achieve better results and optimize IT cost.
6. Go paperless
How much money do companies spend on paper, ink, printers, and other supplies related to paper documents? It’s fair to say that although the sum might seem minimal from first sight, it increases the expenses several times.
So, consider opting for digital invoices, bills, and other documents. Despite being more cost-effective, being paperless implies that you can easily find files on the cloud, edit the documents anytime, and save around 60% of office supply costs. Besides, being eco-friendly and use green computing strategies is a trend, and the companies that follow it have a higher reputation in the eyes of their clients.
7. Buy used but well-performing equipment
If there’s a choice between buying new furniture from the market and spending a fortune on it or purchasing vintage stuff that is in good condition, what would you choose?
If you aim for IT cost savings, we bet you’ll opt for the second alternative.
There’s nothing wrong with buying refurbished furniture and equipment if they look and serve the same as luxury goods. So, if you buy not new but well-performing printers, faxes, and computers, you can save up to 60% of business costs.
8. Choose renewable energy suppliers
If you have an in-house team, you know the pain of receiving utility bills that require paying significant sums and strain the wallet every month. Since there’s not much pleasure in paying these huge sums, you can switch to virtual phone lines, fluorescent light bulbs, and energy-efficient appliances.
Although switching to these alternatives seems expensive once you buy them, you’ll save a lot of money in the long run.
9. Consider relocating your office or making it virtual
The office in the city center is always great, but if your employees’ tasks aren’t related to cooperating with customers offline, is it worth spending a fortune on rent?
If possible, consider moving to a less expensive city area or think of shared workplaces, like turning the space you don’t use into a coworking area.
Also, a virtual office can significantly impact IT cost optimization because you won’t have to pay for office leases, utility payments, and other things like coffee and cookies.
10. Pay attention to proper time-management
Prior planning always pays off because the employees understand how much time they’ll need to deliver certain services, and you won’t be afraid to schedule other customers’ projects. Besides, emphasize goal-setting, focus, communication, and other soft skills development among employees because they’ll become less distracted, ensuring improved performance and increased IT cost savings.
Establishing the IT cost optimization framework requires time and effort, but they pay off in the long run. You need to combine optimization techniques with well-thought strategies to boost business and optimize costs.
If you’re interested in one of the best optimization methods — IT outsourcing, reach out to our experts, and we’ll find top-notch experts for your business.